Scrolling effect for GUI menu in BGE
You can use a property to hold the selected circle index, then switch between them each time the mouse-wheel rotate.

the easiest way was the script, the script is attached to the first circle as follows :



the first circle has two properties selected "the index of the selected circle"  and open  "indicates whether the menu is open or not"



here is the script used in the file :

def switch_selected():
    #get this controller   
    cont = bge.logic.getCurrentController()
    # the object running the script "1st cicle selected"
    owner = cont.owner
    # get this scene and a list of its objects
    scene = bge.logic.getCurrentScene()
    objects = scene.objects

    #hide all circles  to clear the previous selection ( also in case the menu is closed no circle is selected)
    objects['1st cicle selected'].visible = False
    objects['2nd Circle Selected'].visible = False
    objects['3d cicle Selected'].visible = False
    objects['4th Circle Selected'].visible = False
    objects['5th cicle Selected'].visible = False        

    #check if menu is open
    if owner['open'] :
        #get the mouse wheel sensors 
        mouse_up = cont.sensors["up"]
        mouse_down = cont.sensors["down"]

        #if mouse up increment index
        if mouse_down.positive :
            owner['selected'] += 1
            if owner['selected'] &gt; 4 :
                owner['selected'] = 0
        #if mouse down decrement index
        if mouse_up.positive :
            owner['selected'] -= 1
            if owner['selected'] &lt; 0 :
                owner['selected'] = 4   

        # read the index and set the selected to be visible
        selected = owner['selected']       
        if selected == 0 :
            objects['1st cicle selected'].visible = True
        elif selected == 1 :
            objects['2nd Circle Selected'].visible = True
        elif selected == 2 :
            objects['3d cicle Selected'].visible = True
        elif selected == 3 :
            objects['4th Circle Selected'].visible = True
        elif selected == 4 :
            objects['5th cicle Selected'].visible = True


switch_selected() #a call for the above function at each tick


Here is the file